Shoukat Allabksha Bagwan, Ichalkaranji V. Joint Commissioner of Income-tax,

ITA 1086/PUN/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 9270 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 9 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-03-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2011-2012
• Appeal Filed On: 23-05-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: M K KULKARNI SHRI MUKESH JHA
• Keywords: Reasonable cause

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE . , , BEFORE SHRI D.KARUNAKARA RAO, AM AND SHRI VIKAS AWASTHY, JM . / ITA NOS.1086 & 1087/PUN/2016 / ASSESSMENT YEARS : 2011-12 & 2012-13 SHOUKAT ALLABAKSHA BAGWAN, LEGAL HEIR ARISH SHOUKAT BAGWAN, 6/464, NEAR JAYASHREE SIZING, SANGLI ROAD, ICHALKARANJI 416 115 PAN : ABYPB5124E . /APPELLANT VS. JCIT, ICHALKARANJI RANGE, ICHALKARANJI/ITO, WARD-4, ICHALKARANJI . / RESPONDENT ASSESSEE BY : SHRI M.K. KULKARNI REVENUE BY : SHRI MUKESH JHA, JCIT / DATE OF HEARING : 01.03.2018 / DATE OF PRONOUNCEMENT: 09.03.2018 / ORDER PER D. KARUNAKARA RAO, AM : THERE ARE TWO APPEALS FILED BY THE ASSESSEE UNDER CONSID ERATION AGAINST THE COMMON ORDER OF CIT(A)-2, KOLHAPUR, DATED 10- 02-2016 FOR THE ASSESSMENT YEARS 2011-12 & 2012-13. THE ISSUES R AISED IN THE APPEALS ARE IDENTICAL AND THE SAME RELATES TO THE CORREC TNESS OF ESTIMATION OF INCOME FROM SUGARCANE AND VEGETABLES/FRUITS E TC., AND ALLOWABILITY OF EXTENT OF AGRICULTURAL EXPENDITURE. 2. THERE IS DELAY OF ONE MONTH IN FILING THE APPEALS BEFORE TH E TRIBUNAL. BEFORE US, AT THE OUTSET, LD. COUNSEL FOR THE AS SESSEE BROUGHT OUR ATTENTION TO THE LETTER DATED 20-05-2016 AND SUBM ITTED THAT THE ASSESSEE EXPIRED IN AN ACCIDENT AND THE LEGAL HEIRS OF THE ASSESSEE ARE 2 NOT AWARE OF THE LEGAL FORMALITIES. THEREFORE, LD. COUNSEL PRA YED FOR CONDONING THE DELAY AND ADMIT THE APPEALS FOR ADJUDICATION. 3. AFTER HEARING BOTH THE SIDES AND THE CONTENTS OF LETT ER DATED 20-05-2016, WE FIND THERE IS A REASONABLE CAUSE IN FILING THE APPEALS BEFORE THE TRIBUNAL AND THEREFORE, THE SAID DELAY OF ONE M ONTH IS CONDONED AND THE APPEALS ARE ADMITTED FOR ADJUDICATION. 4. BEFORE US, LD. COUNSEL FOR THE ASSESSEE BROUGHT OUR A TTENTION TO THE GROUNDS AND SUBMITTED THAT THEY RELATE TO THE ESTIMATION/ALLOWABILITY OF THE AGRICULTURAL INCOME ON ACCOUNT SUGARCANE AND VEGETABLES/FRUITS ETC. AS WELL AS THE ESTIMA TION OF AGRICULTURAL EXPENDITURE. LD. COUNSEL SUBMITTED THAT THE C IT(A) HELD THAT 54% AND 50% OF THE GROSS RECEIPTS FROM SUGARCANE AND VEGETABLES/FRUITS ETC. RESPECTIVELY ARE ALLOWABLE TOWARDS THE AGRICULTURAL EXPENSES AND PAYMENTS FOR CONTRACTUAL FARMING. ASSESSEE IS AGGRIEVED AGAINST THE SAID DECISION OF THE CIT(A). AT THE OUTSET, BRINGING OUR ATTENTION TO AN ORDER OF T HE TRIBUNAL IN THE GROUP CASES OF THE ASSESSEE, LD. COUNSEL SUBMITTED THAT THE TRIBUNAL ALREADY TOOK A VIEW ON THE ISSUE AND THE SAME N EEDS TO BE FOLLOWED IN THIS CASE AS WELL. 5. FURTHER, LD. COUNSEL FOR THE ASSESSEE FILED THE COPIES OF THE ORDERS OF THE TRIBUNAL DATED 15-02-2017 AND 17-05-2017 IN THE CASES OF RELATED PARTIES OF THE ASSESSEE, I.E. IN THE CASE OF ANJUM S HOUKAT BAGWAN, ARISH SHOUKAT BAGWAN, SHAHNAZ SHOUKAT BAGWAN, K AISH SHOUKAT BAGWAN, SONIYA NAGARI VINKAR & VINKAR VYAVASAIK SAH. PAT SANSTHA LTD. AND VICE VERSA ITA NOS. 215 TO 225/PUN/ 2013 AND OTHERS FOR THE A.YRS. 1999-2000 TO 2009-10 AND ITA NOS .193 TO 203/PUN/2013 AND OTHERS. MENTIONING THAT THE ISSUES RA ISED BY THE ASSESSEE IN THESE APPEALS ARE IDENTICAL TO THE CASES OF THE RELATED PA RTIES 3 WHERE THE TRIBUNAL DECIDED THE ISSUE PARTLY IN FAVOUR OF T HE ASSESSEE, LD. COUNSEL FOR THE ASSESSEE REQUESTED THE BENCH TO DE CIDE THE APPEALS IN THE LINES OF THE ORDERS OF THE TRIBUNAL (SUPRA). LD. DR FOR THE REVENUE RELIED ON THE ORDERS OF THE AO/CIT(A). 6. WE HEARD BOTH THE SIDES ON THE ISSUES RAISED BY THE ASSESSEE AND PERUSED THE ORDERS OF THE REVENUE. WE HAVE ALSO PERUS ED THE ORDERS OF THE TRIBUNAL IN THE CASES OF RELATED PARTIES (BAGWAN GRO UP) RELIED ON BY THE LD. COUNSEL FOR THE ASSESSEE. WE FIND THE TRIBUNAL IN ITA NOS. 193 TO 203/PUN/2013 AND OTHERS IN THE CASE OF ARISH SHOUKA T BAGWAN & OTHERS AND ITA NOS.1128 & 1129/PUN/2015 AND ITA NOS.1 131 & 1132/PUN/2015 IN THE CASES OF SMT. KHATUNBI BADSHA BAG WAN AND SHRI IMRAN BADSHA BAGWAN, ORDER DATED 16-02-2018 HAVE DEALT WITH THE ISSUES RAISED BY THE ASSESSEE . ON PERUSAL OF THESE ORDERS, WE FIND THAT THE TRIBUNAL IN THE CASES OF SMT. KHATUNBI BADSHA BA GWAN AND SHRI IMRAN BADSHA BAGWAN (SUPRA) IN PARA NO. 6 TO 8 HAS DECIDED THE ISSUES. WE FIND IT RELEVANT TO EXTRACT THE SAID FINDINGS FOR THE SAKE OF COMPLETENESS OF THIS ORDER AS UNDER : 6. I HEARD BOTH THE SIDES ON THIS ISSUE OF DETERMI NING THE ALLOWABLE AGRICULTURAL INCOME FROM SUGARCANE, GRASS, VEGETABL ES ETC. ON PERUSAL OF THE ORDER OF TRIBUNAL DATED 11-08-2017 IN ASSESSEE S OWN CASE FOR THE A.YRS. 1999-2000 TO 2006-07 (SUPRA), I FIND IT RELE VANT TO EXTRACT THE SAID PARA NOS.32 & 33 OF THE ORDER AND THE SAME READS AS UNDER : 32. THE CIT(A) HAS ESTIMATED EXPENDITURE AT 54%. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE HAS AGRE ED THAT IN THE ABSENCE OF DETAILS NOT BEING MAINTAINED BY IT IN RE SPECT OF EXPENDITURE INCURRED, SOME ESTIMATION HAS TO BE MAD E. HOWEVER, HE IS AGGRIEVED BY ESTIMATION BY THE CIT(A) AT 54%. THE CIT(A) HAS ANALYZED THE FACTUM OF EXPENSES INCURRED BY THE ASS ESSEE AND VARIOUS DOCUMENTS AND WE HAVE ALREADY PERUSED THE S AME AND WE ARE IN CONFORMITY WITH THE ORDER OF CIT(A) IN NO T CONSIDERING THE BATAI EXPENDITURE AS PART OF EXPENDITURE FOR COMPUT ING THE INCOME FROM SUGARCANE. THE CIT(A) HAS ESTIMATED THE EXPEN SES AT 54% OF RECEIPTS. HOWEVER, WE DEEM IT FIT TO ESTIMATE THE SAME AT 50% I.E. 50% OF GROSS RECEIPTS WOULD CONSTITUTE THE ASSESSEES INCOME FROM AGRICULTURAL OPERATIONS OF GROWING SUGA RCANE; WHICH WOULD FORM A PART OF CASH FLOW OF ASSESSEE AND THE ASSESSING OFFICER SHALL WORK OUT THE IMPACT OF NEGATIVE CASH FLOW IN THE HANDS OF ASSESSEE. THE CLAIM OF LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE BEFORE US IS THAT T HE INVESTMENTS IN ASSETS STANDS COVERED AFTER THE ORDER OF CIT(A), WHEREIN HE HAD ESTIMATED THE EXPENSES AT 54% EXCEPT FOR NEGATIVE C ASH BALANCE 4 ADDED IN ASSESSMENT YEAR 2005-06 AND WE HAVE REDUCE D THE SAME TO 50% AND THE ASSESSING OFFICER IS DIRECTED T O VERIFY AND DECIDE THE CASH POSITION IN ASSESSMENT YEAR 2005-06 ACCORDINGLY. 33. NOW, COMING TO THE NEXT ESTIMATION OF INCOME IN THE HANDS OF ASSESSEE I.E. INCOME FROM VEGETABLES CROP. THE ASSESSEE CLAIMS THAT PART OF CROPS WERE GROWN ALONG WITH SUG ARCANE AND THE BALANCES ON THE LAND AVAILABLE I.E. ABOUT 30-31 ACREAS WHICH ARE UNDER CULTIVATION OF VEGETABLES, GRASS SCIENTIF ICALLY GROWN AS CATTLE FEED AND OTHER CROPS. AS IN THE CASE OF SUG ARCANE, THE FIRST ASPECT IS THE PERCENTAGE OF EXPENDITURE INCURRED BY THE ASSESSEE FOR GROWING VEGETABLES; THE SECOND ASPECT IS THE IN COME FROM RECEIPTS FROM GROWING VEGETABLES. SINCE THE ASSESS EE HAS NOT MAINTAINED ANY DETAILS IN THIS REGARD AND THE ASSES SING OFFICER HAD POINTED OUT THAT THERE IS NO MENTION IN 7/12 EX TRACTS IN RESPECT OF GROWING OF VEGETABLES. THE ASSESSEE ON THE OTHER HAND, POINTS OUT THAT SINCE VEGETABLES WERE GROWN FOR DUR ATION OF 3-4 MONTHS AND WERE REPEATEDLY BEING CHANGED DOES NOT F IND MENTION IN 7/12 EXTRACTS. HOWEVER, THE SALE PATTIES WERE R ECOVERED FROM THE RESIDENCE OF ASSESSEE WHICH REVEALED THE YIELD OF VEGETABLES PER ACRE IN VALUE. BOTH THE AUTHORITIES BELOW HAVE ADMITTED THAT EXCEPT FOR FEW SALE PATTIES OF NOMINAL VALUE, MAJOR LY THE SALE PATTIES OF VEGETABLES WERE AVAILABLE FROM THE RESID ENCE OF ASSESSEE. IN OTHER WORDS, THERE IS NO DISPUTE IN R ESPECT OF RECEIPTS FROM SALE OF VEGETABLES TO BE WORKED OUT IN THE HAN DS OF ASSESSEE. THE ONLY DISPUTE REMAINS IS IN RESPECT OF EXPENDITU RE ON GROWING OF VEGETABLES. THE ASSESSING OFFICER IN THE HANDS OF ASSESSEE HAD ESTIMATED THE INCOME AT RS.5,000/- PER ACRE AND AFT ER DEDUCTING ON ACCOUNT OF EXPENDITURE AND BATAI EXPENSES HAD TA KEN THE NET YIELD AT RS.2500/- PER ACRE. THE ASSESSEE HAD SHOW N THE EXPENSES AT 20% AND THE CIT(A) HAD TAKEN THE EXPENS ES AT 50% OF THE RECEIPTS AND HAD NOT DEDUCTED ANY EXPENDITURE O N ACCOUNT OF BATAI. THE LEARNED AUTHORIZED REPRESENTATIVE FOR T HE ASSESSEE FAIRLY ADMITTED BEFORE US THAT IN THE ABSENCE OF AN Y DETAILS BEING MAINTAINED, EXPENDITURE HAS TO BE ESTIMATED. THE F IRST ASPECT OF THE ISSUE IS THAT IN THE ABSENCE OF ANY EVIDENCE FO UND OF BATAIA EXPENSES FOR GROWING VEGETABLES, THERE IS NO QUESTI ON OF DEDUCTING 50% ON ACCOUNT OF BATAI EXPENSES. WE UPHOLD THE OR DER OF CIT(A) IN THIS REGARD. THE SECOND ASPECT IS THE PERCENTAG E OF EXPENSES TO BE ESTIMATED ON ACCOUNT OF CULTIVATION OF VEGETABLE S. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT IN ASSESSMENT YEAR 1999-2000, THE ASSESSING OFFICER HA S TAKEN THE ESTIMATED EXPENDITURE AT 40% WHICH WAS HIGH AND THE SAME MAY BE ADOPTED AT 30%. FOLLOWING THE PRINCIPLES OF NAT URAL JUSTICE, WE HOLD THAT IN THE ABSENCE OF ANY DETAILS BEING MAINT AINED, IT WOULD BE FAIR TO ESTIMATE THE EXPENDITURE AT 35% FOR GROWING VEGETABLES. THERE IS NO MERIT IN THE ORDER OF CIT(A) IN ESTIMATING THE SAME AT 50% SINCE THE EXPENDITURE FOR THE CROP OF SUGARCANE IS HIGHER AS COMPARED TO THE VEGETABLE CROPS. ACCORDINGLY, WE HOLD SO. 7. FROM THE ABOVE, IT IS EVIDENT THAT, AGAINST THE DECISION OF CIT(A) ALLOWING THE EXPENDITURE AT THE RATE OF 54%, THE TR IBUNAL DEEMED IT FIT TO ESTIMATE THE SAME AT 50%, I.E. 50% OF THE GROSS REC EIPTS WOULD CONSTITUTE AGRICULTURAL INCOME FROM THE AGRICULTURAL OPERATION S OF GROWING SUGARCANE . TO THAT EXTENT, THE TRIBUNAL HAS FAVOURED THE AS SESSEE IN TERMS OF ALLOWING THE INCREASED EXEMPT AGRICULTURAL INCOME. FURTHER, REGARDING THE AGRICULTURAL INCOME FROM VEGETABLES , THE TRIBUNAL (AT PARA NO.33) DEEMED FIT TO ESTIMATE THE AGRICULTURAL EXPE NDITURE AT 35% THEREBY QUANTIFYING THE EXEMPT AGRICULTURAL INCOME ON ACCOU NT OF VEGETABLES AT 65% OF THE AGRICULTURE INCOME RECEIVED BY THE ASSES SEE ON ACCOUNT OF VEGETABLES. IN THIS REGARD, THE TRIBUNAL DISAPPROV ED THE CIT(A)S 5 ESTIMATION ADOPTING 50% OF THE AGRICULTURAL EXPENDI TURE ON ACCOUNT OF VEGETABLES. 8. THEREFORE, CONSIDERING THE SAME, I AM OF THE OPI NION THAT THE GROUNDS RAISED BY THE ASSESSEE FOR A.Y. 2008-09 HAS TO BE DECIDED IN THE LINES DECIDED BY THE TRIBUNAL FOR THE EARLIER A.YRS . 1999-2000 TO 2006-07. I DIRECT THE AO ACCORDINGLY. I ALSO NOTICED THAT TH E SAID ORDER OF THE TRIBUNAL (SUPRA) IN ASSESSEES OWN CASE BEING DATED 11-08-2017 DID NOT EXIST AT THE TIME WHEN THE CIT(A) PASSED THE ORDER ON 29-05-2015. THEREFORE, WITHOUT GOING INTO THE MERITS OF THE CAS E, I AM OF THE OPINION THAT THE ISSUE STANDS COVERED IN FAVOUR OF THE ASSE SSEE. THUS, THE GROUNDS RAISED BY THE ASSESSEE ARE PARTLY ALLOWED. 7. FROM THE ABOVE EXTRACT, WE FIND THE GROUNDS RAISED BY THE ASSESSEE IN THESE APPEALS ARE IDENTICAL. THEREFORE, FOLLOWING T HE SAME REASONING, THE APPEALS OF THE ASSESSEE FOR BOTH THE ASSE SSMENT YEARS ARE PARTLY ALLOWED. AO IS DIRECTED TO APPLY THE RATIOS LAID DOWN BY THE TRIBUNAL IN THE ORDERS DATED 16-2-2018, 17-05-2017 AND 15-02-2017 (SUPRA). ACCORDINGLY, THE GROUNDS RAISED IN BOTH THE APPE ALS ARE PARTLY ALLOWED. 8. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE PARTLY ALLOWE D. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 09 TH DAY OF MARCH, 2018. SD/- SD/- (VIKAS AWASTHY) (D. KARUNAKARA RAO) /JUDICIAL MEMBER / ACCOUNTANT MEMBER PUNE; DATED : 09 TH MARCH, 2018 / COPY OF THE ORDER FORWARDED TO : / BY ORDER, //TRUE COPY// //TRUE COPY// SENIOR PRI VATE SECRETARY , / ITAT, PUNE 1. / THE APPELLANT 2. / THE RESPONDENT 3. THE CIT(A)-2, KOLHAPUR 4. CIT-2, KOLHAPUR 5. , , B BENCH PUNE; 6. / GUARD FILE.